China home sales slump persists as calls grow for more stimulus

[BEIJING] China’s home sales extended their slump in June, putting further strain on the economy and underscoring the impetus for fresh support measures. 

The value of new-home sales from the 100 largest property companies stood at 339 billion yuan (S$60.3 billion), the latest preliminary data from China Real Estate Information Corp (CRIC) on Monday (Jun 30) showed. That represents a 23 per cent fall from a year ago, according to Bloomberg calculations. June’s sales follows an 8.6 per cent decline in May. On a monthly basis, however, the latest sales were up 14.7 per cent from May, CRIC said. 

China’s housing downturn has dragged on for four years, as the effects of a stimulus blitz last September wear off. Premier Li Qiang this month pledged more action to revive the market, which analysts say is necessary to boost consumption and offset the threat to exports from US tariffs. 

“More support will be needed, but we don’t expect a big shift in approach” to housing, Duncan Wrigley, chief China economist with Pantheon Macroeconomics, wrote in a report last week. “China is resigned to a slow recovery.”

Even if China’s housing market picks up, the long-term outlook remains grim. Demand for new homes in cities is expected to stay at 75 per cent below its 2017 peak in the coming years, due in part to a shrinking population, Goldman Sachs Group estimated. BLOOMBERG